Single Touch Payroll (STP) will be mandatory for all employers from 1st July 2021 (extended from 1st July 2020 as previously advised). If your business is a closely-held entity and/or not set up yet for STP, now is the time to start setting up an STP-enabled payroll service.
What is Single Touch Payroll?
When you use a payroll management software (either online or using an installed program that can send data to ATO electronically), you are able to communicate data to ATO every time you process a payslip for an employee. While the set up and transition can cause smaller employers some inconvenience, using this system on a regular basis is incredibly simple and efficient.
Does your business need to use it?
ALL employers, whether they are closely-held or not, will need to use STP from 1st July 2021, even if they are considered “micro employers” with 4 or less employees (some exemption is allowed for micro-employers who have Exceptional Circumstances).
If you are a closely-held entity, you can choose to report your payments to closely-held employees using 3 options:
Report actual payments each pay event (along with any of your arms’ length employees)
Quarterly reporting of actual payments
Quarterly reporting with a reasonable estimate.
All 3 options must be reported through STP-compliant software, and all options are in addition to the regular BAS reporting requirements (this does not replace the requirement to submit BAS or report wages through the BAS).
How to get set up:
The first step is to have a cloud-based payroll management system.
Some software providers have developed a low cost cloud based software for micro-employers who only need to be STP compliant but do not want any other cloud-based software for their business. Our recommended provider is Xero ($10 per month for up to 4 employees, or Payroller which is free to use for an unlimited number of employees). Please note that Payroller only provides payroll services while some other platforms provide a full range of bookkeeping functions (Xero, QB, MYOB etc). You can find other software providers here.
Once you have set up your account online, you will need to register for MyGovID to log in to your business access manager. You will need to download the application to your phone and verify your identity. The ID will need to match the name that and TFN that is linked to your business ABN (for companies, it will be the name of the directors of the company).
After you have registered your myGovID, you will need to connect the ID to your business ABN. You can do this by logging into the Relationship Authorisation Manager and following the steps. Once this is all set up, you can then go to ATO’s Access Manager and log in.
Click on the link from the left-hand menu titled “My Hosted SBR Software Services”.
Find your software provider from the list (or search by name or ABN) and select
Add your software ID# (this can be found when you are logged in to your payroll software during the STP set up).
You will need to confirm and save.
Go to your software provider website, log in and go to STP set up
Make a declaration that you have “advised ATO” about your SBR Service Provider and follow the steps to complete the set up (the steps will be different for each software provider, but it should all be fairly straight forward).
Now you are ready to report your wages and super to ATO using STP (Some payroll providers might have other simpler methods of connecting to STP, and if the above process is too difficult, you can also call ATO’s STP hotline and connect over the phone - 1300 852 232)
To view ATO’s step by step guide for adding Software Services on access manager, please click here.
Can SJB set this all up for your business?
Yes, we can certainly help you. Get in touch with us if you would like assistance in setting up a payroll software account and registering for STP. We recommend that you set this up no later than 30th June 2021 as it will be difficult for us to provide assistance during “tax time”.
Once the software is enabled and connected to ATO, you will need to process the payroll yourself using one of the 3 options listed above (note that if your business is not closely-held, you will need to use option 1 only).